SRB announced that the Single Resolution Fund received an increase of EUR 9 billion from 3,066 institutions for 2020, bringing the total amount in the Fund to approximately EUR 42 billion. The target size of the Single Resolution Fund has been set at 1% of covered deposits by the end of 2023. The Fund will end up at close to EUR 70 billion, taking into account the current annual growth in covered deposits. According to the SRB Chair Elke König, the Fund is being "steadily built up" and is on its way to reach the target.
The Single Resolution Fund was established by the Single Resolution Mechanism Regulation (Regulation 806/2014 or SRM Regulation). Where necessary, the Fund may be used to ensure the efficient application of resolution tools and the exercise of the resolution powers conferred to the SRB by the SRM Regulation. The Single Resolution Fund has grown to EUR 42 billion after the latest round of transfers and can be used to support the effective resolution of a failing bank, if needed. However, the Fund shall not be used to absorb the losses of an institution or to recapitalize an institution. The Fund is composed of contributions from credit institutions and certain investment firms in the 19 participating member states within the Banking Union. These contributions are calculated according to EU law and collected via the national resolution authorities.
Within the resolution scheme, the Single Resolution Fund may be used only to the extent necessary to ensure the effective application of the resolution tools, as last resort, in particular:
- To guarantee the assets or the liabilities of the institution under resolution
- To make loans to or to purchase assets of the institution under resolution
- To make contributions to a bridge institution and an asset management vehicle
- To make a contribution to the institution under resolution in lieu of the write-down or conversion of liabilities of certain creditors under specific conditions
- To pay compensation to shareholders or creditors who incurred greater losses than under normal insolvency proceedings
Keywords: Europe, EU, Banking, Single Resolution Fund, Resolution Framework, SRMR, Banking Union, SRB
Previous ArticleIOSCO Report Addresses Improving Audit and Ethics Standard-Setting
The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.
The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).
The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.
The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.
The Hong Kong Monetary Authority (HKMA) announced that the Green and Sustainable Finance (GSF) Cross-Agency Steering Group has launched the information and data repositories and outlined the progress made in advancing the development of green and sustainable finance in Hong Kong.
The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.
The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.
The Network for Greening the Financial System (NGFS) published a report that explores the feasibility of integrating the G-Cubed general equilibrium model into the NGFS suite of models.
Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)
The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.